Nine US Stocks to Watch for Position Trading

Nine US stock charts incline towards a long term uptrend suited for traders into position trading. These stocks come from finance, technology, healthcare and consumer sectors and have all been pointed out in my Ninja Trader market analyzer screen via the [intlink id=”2211″ type=”post”]custom indicator[/intlink] we discussed a couple of days ago. According to the indicator though more than 30 stocks formed a bullish candlestick pattern after yesterday’s huge boost in worldwide stock exchanges, continued today in Asian markets as well! The technical analysis of the following nine stocks however revealed excellent conditions for position traders to include these [intlink id=”17″ type=”category”]stock picks[/intlink] in their watch list. Be prepared to invest both money and patience, as a trade-and-forget mindset is essential for position trading!

Financial Sector

AGO: The Bermuda-based holding company, Assured Guaranty Ltd, has seen its stock climb to $30 in 2007 before a long term downtrend brought the shares to their knees, hitting an all-time low of $2.64 in August 2009! The stock has since retraced back to $28 and resumed trending downwards. Nowadays traders can buy AGO stock for $9.70 per share. The support level at $10 has been broken this week but quite a few analysts could have identified that price action as false breakout. This investment is considered somewhat risky, since position traders will be betting against the long term trend. Yet, the stock price is likely to climb back up to the moving average in the monthly chart from the lower Bollinger Band where it’s currently trading.


FII: Shares of Federated Investors Inc, an investment management company of 1.65B market capitalization, have lost 25% of their value in November but the price action indicated a bounce off the support level at $15. It’s not the first time the FII stock price has found support at that price range. In late 2009 the shares had experienced a sell off that drove price from the high of $44 down to $15 in 12 months! Trading long at that level makes sense both for short term and long term traders, but if position trading is in question, setting a stop loss of one dollar per share and a profit target of –dare I say – 12 dollars per share equals with an outstanding reward-risk ratio of 12-1! The inverted “W” formation is worth noticing in the monthly stock chart!


WDR: Waddell & Reed Financial Inc is another investment management company with a higher P/E than Federated Investors. Technical analysis on the monthly chart this time proves the stock is trending upwards. Trend following position traders have already invested in this company for sure in summer of 2010 and maybe now they are going to add to their positions. The long shadows of the November’s almost doji candlestick indicate a likely resume of the long term uptrend. Using the daily or weekly chart to figure out the correct stop loss entry level ($22 daily, $20 weekly) will safely determine the maximum risk of the exposed position trader. As WDR stock hit a 10-year high in 2011, there’s no objection at setting a profit target that high for a lucrative reward-risk ratio. Obviously, checking the price action from time to time is necessary, in case the stock fails to approach that top.


MS: Morgan Stanley’s shares gained 11% yesterday and are trading for $14.79. The MS stock price had bounced at $13 twice before with a minor false breakout in October. The $15 level has been a significant support level in 2008 when Morgan Stanley stock price continued its 2007 fall. Although there’s no guarantee investors have seen the lowest low of their Morgan Stanley’s shares, there’s likelihood the stock enters a consolidation phase if not an uptrend, reversing the trend! Given the double bottom formation at the weekly chart, position traders will find it extremely useful to set their stop loss orders in case they bet on Morgan Stanley stock.


Read [intlink id=”2234″ type=”post”]the rest of the stocks to watch for position trading[/intlink] in the follow-up post today.

Disclaimer: I’m looking to trade long some of these stocks today.